BMW of North America, LLC et al v. Kuveyka et al

Filing 34

OPINION AND ORDER: it is ORDERED as follows: (1) Dfts Aysam Kuveyka and Kuveyka's Imports, Inc.'s 29 motion to vacate the default judgment against Kuveyka and set aside the entries of default is granted as follows: (a) the 24 default ju dgment against dft Aysam Kuveyka is vacated; and (b) the 20 & 26 entries of default against dfts Aysam Kuveyka and Kuveyka's Imports, Inc. are set aside; (2) Plfs BMW of North America, LLC, and Bayerische Motoren Werke AG's 27 motion for default judgment against dft Kuveyka's Imports, Inc. is denied; further ORDERED that the parties are allowed until 8/15/2014, to notify the court whether they have settled this case. If they have not, the court will proceed with the litigation of this case. Signed by Honorable Judge Myron H. Thompson on 7/15/2014. (wcl, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

BMW OF NORTH AMERICA, LLC
and BAYERISCHE MOTOREN
WERKE AG,
Plaintiffs,
v.
AYSAM KUVEYKA and
KUVEYKA’S IMPORTS, INC.,
dba Aysam’s Import Auto
Inc.,
Defendants.

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CIVIL ACTION NO.
2:13cv318-MHT
(WO)

OPINION AND ORDER
Plaintiffs BMW of North America, LLC, and Bayerische
Motoren Werke AG filed this lawsuit against defendants
Aysam Kuveyka and Kuveyka’s Imports, Inc., asserting
claims based on the defendants’ allegedly unauthorized
use and display of BMW’s Roundel logo at their automotive
business, in violation of the Lanham Act, 15 U.S.C.
§ 1051 et seq., and Alabama law.

The plaintiffs request

both monetary and injunctive relief.

The court has

federal subject-matter jurisdiction pursuant to 15 U.S.C.

§ 1121 and 28 U.S.C. §§ 1331 and 1338(a) & (b), and
supplemental jurisdiction under 28 U.S.C. § 1367(a).
This

litigation

is

now

before

the

court

on

two

motions: (1) the defendants’ motion to set aside the
entries of default entered against both of them and to
vacate
Kuveyka;

the
and

default
(2)

the

judgment

entered

plaintiffs’

judgment against Kuveyka’s Imports.
hearing was held on the motions.

against

motion

for

Aysam
default

An on-the-record
For the following

reasons, the defendants’ motion will be granted and the
plaintiffs’ motion denied.

I.

CHRONOLOGICAL BACKGROUND

May 13, 2013: This lawsuit is filed.
January 16, 2014: Default is entered against Aysam
Kuveyka.
May 16: Default judgment is entered against Aysam
Kuveyka.
May 20: Default is entered against Kuveyka’s Imports.

2

May 28: The plaintiffs filed their motion for default
judgment against Kuveyka’s Imports.
June 11: The defendants filed their motion to set
aside the default entries against them and to vacate the
default judgment against Aysam Kuveyka.
July 9: A hearing was held on the two motions at
issue.

II.

THE DEFENDANTS’ MOTION TO SET ASIDE
THE DEFAULTS AND TO VACATE
THE DEFAULT JUDGMENT
A. Entry of Default Against
Defendant Kuveyka’s Imports

Whether Kuveyka’s Imports is entitled to have the
default against it set aside is controlled by Fed. R.
Civ. P. 55(c), which provides that, “The court may set
aside an entry of default for good cause.”

To determine

whether there is good cause, courts look to a range of
factors, including “whether the default was culpable or
willful, whether setting it aside would prejudice the
adversary, and whether the defaulting party presents a
3

meritorious defense.”

Compania Interamericana Export-

Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d
948, 951 (11th Cir. 1996).

All these factors favor

setting aside the default against Kuveyka’s Imports.
First, no one with authority has accepted service on
Kuveyka’s Imports.

While service was made on ‘someone’

at the company, the evidence reflects that that person
did not have authority to accept service for the company.
Admittedly,

the

plaintiffs

moved

to

serve

Kuveyka’s

Imports by regular mail, pursuant to Fed. R. Civ. P.
4(h)(1)(A) and Ala. R. Civ. P. 4(e).

The Alabama rule

permits such service when service of process is refused.
As evidence of the refusal, the plaintiffs pointed to a
non-agent’s

refusal

to

accept

service

and

frequent

statements that Aysam Kuveyka was out of the country and
could not therefore be made available to receive service.
The court granted the plaintiffs’ motion, albeit without
deciding whether such service would be appropriate or
adequate.

See Order (Doc. No. 16).

4

However, in light of

Aysam Kuveyka’s sworn affidavit that he was, in fact, out
of the country and that the person who was served at the
company was not authorized to receive service, the court
now finds that Kuveyka’s Imports had not refused service
and

therefore

that

service

by

regular

mail

was

not

appropriate or adequate.
Second, even if service were proper on Kuveyka’s
Imports, the company’s default was not willful and thus
the company is not culpable.

The record does not reflect

that the company’s officers or owners were aware of this
lawsuit.
Third, the plaintiffs would not be prejudiced by
setting aside the default.

The plaintiffs are still

fully able to litigate this case.

For example, at the

time of entry of default, this case had been pending for
only

a

year,

and

no

evidence

has

been

lost

or

compromised.
Fourth,
litigation

Kuveyka’s
is

now

moot

Imports
because,

5

contends
except

that
for

this

monetary

relief, it has already done all that the plaintiffs have
asked for in their complaint.

It appears that the

company stopped infringing on BMW’s mark long before the
entry of default.
Fifth and perhaps most importantly, it appears that
the parties are near voluntary and amicable resolution of
this case.

While the plaintiffs, understandably, seek an

enforceable judgment to ensure future non-infringement,
Kuveyka’s Imports has articulated a mechanism by which
effective service can be effected, and the parties appear
able to agree on a stipulated judgment.
The

court

will

therefore

set

aside

the

default

against Kuveyka’s Imports.

B. Entry of Default Judgment
Against Defendant Aysam Kuveyka
The court will next address whether the default
judgment against Aysam Kuveyka should be vacated.
The standard for vacating a default judgment is
unclear because there are conflicting directions within
6

the Federal Rules of Civil Procedure.

On the one hand,

the standard for non-final orders seems to apply because
the default judgment has not yet become a final judgment.
Under Fed. R. Civ. P. 54(b), a final judgment against one
party, where the case is going forward against one or
more other parties, is not final unless the court finds
that “there is no just reason for delay.”
finding

regarding

delay,

this

rule

Without a

states

that

the

judgment “may be revised at any time before the entry of
a

judgment

adjudicating

all

the

parties’ rights and liabilities.”
This

court

has

made

no

such

claims

and

all

the

Fed. R. Civ. P. 54(b).

finding,

implicitly

or

explicitly, cf. Denson v. United States, 574 F.3d 1318,
1335 n.52 (11th Cir. 2009) (recognizing implicit finding
that there was no just reason for delay), despite the
fact that the case is still ongoing against the company.
On the other hand, Fed.

R.

Civ.

P. 55, which

governs defaults, explicitly provides that the court “may
set aside a default judgment under [Fed.

7

R.

Civ.

P.]

60(b).”
terms,

Rule 60 (b) provides that, “On motion and just
the

court

may

relieve

a

party

or

its

legal

representative from a final judgment, order, or proceeding”
for a number of specified reasons, including “mistake,
inadvertence, surprise, or excusable neglect; ... the
judgment

is

void;

justifies relief.”
“seeks

to

strike

countervailing

...

or

Fed.
a

...

R.

any

Civ.

delicate

impulses:

the

other

reason

P. 60(b).
balance

desire

to

that

Rule 60(b)

between

two

preserve

the

finality of judgments and the incessant command of the
court’s conscience that justice be done in light of all the
facts.”

Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 401

(5th Cir. Jan. 26, 1981), cert. denied, 399 U.S. 927 (1970)
(internal quotation removed) (emphasis in original).*
Therefore, in determining whether the default judgment
against Aysam Kuveyka should be vacated, this court is
confronted with the question of whether to apply Rule
*The Eleventh Circuit has adopted as precedent all
decisions of the former Fifth Circuit rendered prior to
October 1, 1981. See Bonner v. City of Prichard, 661 F.2d
1206, 1207 (11th Cir. 1981)(en banc).
8

60(b)’s “strict standard envisioned for final judgments”
or Rule 54(b)’s “more liberal standard” envisioned for
“non-final judgments.”

Federal Deposit Ins. Corp. v.

Francisco Investment Corp., 873 F.2d 474, 478 (1st Cir.
1989).
This court will follow the guidance of the Court of
Appeals

for

the

First

Circuit:

“Generally,

non-final

judgments can be set aside or otherwise changed by the
district court at any time before they become final.
Fed.R.Civ.P. 54(b). If we were to apply the [Rule] 60(b)
standard to non-final default judgments we would have the
anomaly of using the strict standard envisioned for final
judgments to non-final default judgments and the more
liberal

standard

of

Rule

54(b)

to

other

non-final

judgments. This result would be inconsistent with the
purposes underlying the Federal Rules of Civil Procedure,
especially considering that when deciding whether to set
aside entries of default and default judgments courts favor
allowing trial on the merits.” Francisco Investment Corp.,

9

873 F.2d at 478; accord Dassault Systemes, SA v. Childress,
663 F.3d 832, 840 (6th Cir. 2011); Hinson v. Webster
Industries, 240 F.R.D. 687, 691 (M.D. Ala. 2007) (DeMent,
J.); see also O'Brien v. R.J. O'Brien & Associates, Inc.,
998 F.2d 1394, 1401 (7th Cir. 1993) (citing Francisco
Investment

Corp.

approvingly

without

deciding

which

standard applies).
Therefore, for the reasons set forth in Francisco
Investment Corp., this court concludes that, in deciding
whether the default judgment against Aysam Kuveyka should
be vacated, Rule 54(b)’s standard, envisioned for non-final
judgments, should apply.

Nevertheless, while Rule 54(b)

provides that a non-final judgment “may be revised at any
time before the entry of a judgment adjudicating all the
claims and all the parties’ rights and liabilities,”

Fed.

R. Civ. P. 54(b), the court’s discretion to revise under
such

circumstances

should

not

be

unbridled.

As

the

esteemed Judge Friendly recognized in a slightly different
context, “where litigants have once battled for the court's

10

decision, they should neither be required, nor without good
reason permitted, to battle for it again.”

Zdanok v.

Glidden Co., 327 F.2d 944, 953 (2d Cir. 1964) (emphasis
added).
Essentially, for the same reasons the court gave for
finding Rule 55(c) “good cause” to set aside the default
against Kuveyka’s Imports, the court finds Rule 54(b) "good
reason"

to

Kuveyka.

vacate

the

default

judgment

against

Aysam

First, no one with authority to accept service

has accepted service on him.

The evidence reflects that

there is deep confusion surrounding service on him.

The

service return states that service was made on an “Elisa
Kuveyka,” but there is no woman Aysam Kuveyka knows by that
name.
claimed

Therefore, the whole basis for the plaintiffs’
service

on

Aysam

Kuveyka

is

insufficiently

reliable, and, as a result, proper service was never
effected on him.

Second, even if service were proper on

Aysam Kuveyka, his default was not willful and thus he is
not culpable. Even if the court were to speculate that the

11

person who was handed the service paper was his wife, the
evidence reflects that she would not have known what she
was

accepting

English.

because

of

her

limited

proficiency

in

Third, as in the instance of Kuveyka’s Imports,

the plaintiffs would not be prejudiced by vacating the
default judgment.

As explained above, the plaintiffs are

still fully able to litigate this case.

Fourth, Aysam

Kuveyka contends, as did Kuveyka’s Imports, that this
litigation is now moot because, except for monetary relief,
it has already done all that the plaintiffs have asked for
in their complaint.

Fifth and perhaps most importantly,

as in the instance of Kuveyka’s Imports, it appears that
the plaintiffs and Aysam Kuveyka are near voluntary and
amicable resolution of this case.

The same as Kuveyka’s

Imports, Aysam Kuveyka has articulated a mechanism by which
effective service can be effected, and the parties appear
able to agree on a stipulated judgment.
Moreover, even if Rule 60(b), rather than Rule 54(b)
applied, the court would still vacate the default judgment

12

against Aysam Kuveyka for the above reasons.
above reasons “justifies relief.”

Fed.

Each of the

R.

Civ.

P.

60(b)(6).
The court will therefore vacate the default judgment
against Aysam Kuveyka.

C.

Entry of Default Against
Defendant Aysam Kuveyka

As stated above, default was entered against Aysam
Kuveyka.
same

The default against him will be set aside for

reasons,

given

above,

that

the

default

judgment

against him will be vacated.

III.

THE PLAINTIFFS’ MOTION FOR
DEFAULT JUDGMENT AGAINST
DEFENDANT KUVEYKA’S IMPORTS

The court will not enter default judgment against
Kuveyka’s Imports for same reasons, given above, that
default should be set aside against the company.

The

plaintiffs’ motion for default judgment against Kuveyka’s
Imports will be denied.
13

* * *
Accordingly, it is ORDERED as follows:
(1) Defendants Aysam Kuveyka and Kuveyka’s Imports,
Inc.’s

motion

to

vacate

the

default

judgment

against

Kuveyka and set aside the entries of default (Doc. No. 29)
is granted as follows: (a) the default judgment against
defendant Aysam Kuveyka (Doc. No. 24) is vacated; and (b)
the entries of default against defendants Aysam Kuveyka and
Kuveyka’s Imports, Inc. (Doc. Nos. 20 & 26) are set aside.
(2)

Plaintiffs

BMW

of

North

America,

LLC,

and

Bayerische Motoren Werke AG’s motion for default judgment
against defendant Kuveyka’s Imports, Inc. (Doc.

No.

27)

is denied.
It is further ORDERED that the parties are allowed
until August 15, 2014, to notify the court whether they
have settled this case.

If they have not, the court will

proceed with the litigation of this case.
DONE, this the 15th day of July, 2014.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE